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Category: Stock Market and Ennis
Date: 2 January 2020 Stock Price: $21.65 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of Ennis a production and sale of printed business products.
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About Ennis
Ennis, Inc. (NYSE:EBF), together with its subsidiaries, engages in the production and sale of printed business products. The Company designs, manufactures and sells an extensive line of stock and custom business forms, checks, commercial printing, promotional products, envelopes, tags, labels, pressure seal, presentation products, plastic cards and multimedia packaging.
Ennis, Inc., was founded in Ennis, Texas in 1909. Since then the growth through acquisitions has turned the company’s one employee into over 2,400 employees, all supported by the continuously expanding network. These employees, combined with over 110 years of experience, help serve more than 40,000 global distributors. The Ennis network currently runs 55 facilities across 21 states.
Ennis, Inc., was founded in Ennis, Texas in 1909. Since then the growth through acquisitions has turned the company’s one employee into over 2,400 employees, all supported by the continuously expanding network. These employees, combined with over 110 years of experience, help serve more than 40,000 global distributors. The Ennis network currently runs 55 facilities across 21 states.
Overview of Ennis' 3rd quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Revenue: $114.860 million (up from $108.070 million from the same quarter of the previous year)
- Revenue increased by 6.2% over the last 12 months
- Cost of goods sold: $81.024 (up from $74.315 million for the same quarter of the previous year)
- Cost of goods sold increased by 9.02% over the last 12 months
- Net income: $10.553 million (up from $10.419 million for the same quarter of the previous year)
- Diluted earnings per share: $0.41 (up from$0.40 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 26.010 million (down from 26.202 million for the same quarter of the previous year)
- Cash and cash equivalents: $61.313 million
- Cash and cash equivalents per share: $2.35
- Cash and cash equivalents makes up 10.9% of Ennis's market capital
- Cash and cash equivalents makes up 16.7% of Ennis's total assets
- Accounts receivable: $45.027 million
- Accounts receivable makes up 12.3% of Ennis's total assets
- Stockholders equity of Ennis: $300.447 million
- Stockholders equity per share: $11.55
- Ennis's is trading at 1.87 times its stockholders equity which is outside the expected range of between 2 and 4 which most companies tend to trade at.
- Cash generated from operations (for the 9 months of fiscal year) : $44.433 million
- Cash generated from operations per share (for the 9 months of fiscal year): $1.70
Ennis' management commentary on the results and earnings guidance
Midlothian, TX. December 20, 2019 -- Ennis, Inc. (the “Company"), (NYSE: EBF), today reported financial results for the three and nine months ended November 30, 2019. Highlights include:
- Revenues increased $6.8 million, or 6.3%, and $31.6 million, or 10.5%, for the three and nine months ended November 30, 2019, respectively, as compared to the same periods last year.
- Earnings per diluted share for the three months and the comparable period last year were $0.41 and $0.40 per diluted share, respectively, and for both the nine months and the comparable period last year were $1.14 per diluted share.
Keith Walters, Chairman, Chief Executive Officer and President, commented by stating, “Overall we are pleased with our performance for the quarter. While our gross profit margin showed a slight decline from the sequential quarter, decreasing from 29.8% to 29.5%, our EBITDA margin increased slightly from 16.2% to 16.6%. Our gross profit margin percentage continues to be impacted by the consolidation of our past four acquisitions, which all had gross profit and operating margins considerably lower than our historical margins. While we are seeing improvements, we don’t expect to see meaningful impact until these acquisitions are fully integrated into our systems, which we expect to be sometime the first half of fiscal year 2021. With that being said, these same acquisitions accounted for over $73 million in sales and over $0.18 in diluted earnings per share for the nine month period.
We continue to strategically repurchase our shares and acquired 42,279 shares in the open market during the third quarter. We have repurchased an aggregate of 336,175 shares in the open market since the acquisition of Wright Business Graphics, which represents over 40% of the shares we issued as consideration for that acquisition, and we have purchased almost 1.82 million shares since the inception of our stock repurchase program. Given our strong financial position, we will continue to explore strategic opportunities as a way to profitably utilize our cash and leverage our balance sheet, and when advantageous, repurchase our shares.”
We continue to strategically repurchase our shares and acquired 42,279 shares in the open market during the third quarter. We have repurchased an aggregate of 336,175 shares in the open market since the acquisition of Wright Business Graphics, which represents over 40% of the shares we issued as consideration for that acquisition, and we have purchased almost 1.82 million shares since the inception of our stock repurchase program. Given our strong financial position, we will continue to explore strategic opportunities as a way to profitably utilize our cash and leverage our balance sheet, and when advantageous, repurchase our shares.”
Ennis (NYSE: EBF) stock price history
The image below, obtained from Google, shows the stock price history of Ennis (NYSE: EBF) over the last 5 years. And it's been a very good time for Ennis (NYSE: EBF). 5 years ago the stock was trading at $13.50 and its currently trading at $20.17. That's a return of 49.4% over the last 5 years. The stock is trading at a lot closer to its 52 week high of $22.00 than it is to its 52 week low of $17.36 which to us is a clear indication that the short term sentiment and momentum is very positive.
Recent coverage of Ennis Inc
The extract below covers the latest news of Ennis as obtained from Zacks
Ennis, Inc. (EBF - Free Report) could be a stock to avoid from a technical perspective, as the firm is seeing unfavorable trends on the moving average crossover front. Recently, the 50 Day Moving Average for EBF broke out below the 200 Day Simple Moving Average, suggesting short-term bearishness. This has already started to take place, as the stock has moved lower by 5.7% in the past four weeks. And with the recent moving average crossover, investors have to think that more unfavorable trading is ahead for EBF stock.
If that wasn’t enough, EBF isn’t looking too great from an earnings estimate revision perspective either. It appears as though many analysts have been reducing their earnings expectations for the stock lately, which is usually not a good sign of things to come. Consider that in the last 30 days, 1 estimate has been reduced, while none has moved higher. Add this in to a similar move lower in the consensus estimate, and there is plenty of reason to be bearish here.
That is why we currently have a Zacks Rank #4 (Sell) on this stock and are looking for it to underperform in the weeks ahead. So, either avoid this stock or consider jumping ship until the estimates and technical factors turn around for EBF.
Read the full article here
Ennis, Inc. (EBF - Free Report) could be a stock to avoid from a technical perspective, as the firm is seeing unfavorable trends on the moving average crossover front. Recently, the 50 Day Moving Average for EBF broke out below the 200 Day Simple Moving Average, suggesting short-term bearishness. This has already started to take place, as the stock has moved lower by 5.7% in the past four weeks. And with the recent moving average crossover, investors have to think that more unfavorable trading is ahead for EBF stock.
If that wasn’t enough, EBF isn’t looking too great from an earnings estimate revision perspective either. It appears as though many analysts have been reducing their earnings expectations for the stock lately, which is usually not a good sign of things to come. Consider that in the last 30 days, 1 estimate has been reduced, while none has moved higher. Add this in to a similar move lower in the consensus estimate, and there is plenty of reason to be bearish here.
That is why we currently have a Zacks Rank #4 (Sell) on this stock and are looking for it to underperform in the weeks ahead. So, either avoid this stock or consider jumping ship until the estimates and technical factors turn around for EBF.
Read the full article here
Ennis (NYSE: EBF) latest stock valuation
So based on the earnings report of Ennis (NYSE: EBF) what do we value Ennis (EBF) stock at? Based on their latest earnings report our valuation models provide a target price (full value price) for Ennis stock at $26.20 a stock (up from our 2nd quarter 2019 earnings report valuation of Ennis). We therefore believe the stock of Ennis is undervalued.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $26.20, we therefore believe a good entry point into the stock of Ennis would be at $23.60 or below. And since the stock of Ennis is trading at well below our suggested entry point we rate the stock of Ennis as a buy.
We expect that the stock of Ennis will increase from current levels to levels closer to our target price in coming weeks and months.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $26.20, we therefore believe a good entry point into the stock of Ennis would be at $23.60 or below. And since the stock of Ennis is trading at well below our suggested entry point we rate the stock of Ennis as a buy.
We expect that the stock of Ennis will increase from current levels to levels closer to our target price in coming weeks and months.
Next earnings release of Ennis Inc
It is expected that Ennis Inc will report their 4th quarter and full fiscal 2019 earnings report in late March 2020